Posts tagged water quality funding

IOWA CITY, Iowa — The Iowa Fiscal Partnership today issued this statement on the conclusion of the 2016 session of the Iowa General Assembly:

When the 2016 session began, Iowa faced a host of critical challenges: polluted water, slow job growth, a tax system skewed to benefit those at the top and those with strong lobbyists, and a wavering commitment to investments in education and services for low- and moderate-income working families — those most vulnerable in our state. There were fresh uncertainties about health care due to plans to privatize Medicaid.

This session has done little to ease any of those concerns, and nothing to meet those challenges for the long term. Public policy stands tall when it supports long-held, long-promoted values of our state. Education and a clean environment are among those. Neither had victories of note.

Education School funding remains too little and too late. Lawmakers in the House and Senate set State Supplemental Aid (SSA), which governs growth in per-pupil spending in Iowa schools, at 2.25 percent for Fiscal Year 2017 — a compromise below even the Governor’s meager proposal of 2.45 percent. With this, average per-pupil spending growth in Iowa will have been below 2 percent for seven years. School districts have already begun reducing teaching staff to cope with this low funding level, while property tax increases will be necessary in several districts that have declining enrollment. Money existed in the treasury to do much better.

In addition, the Legislature — which acted on FY2017 SSA about 13 months past the legal deadline — chose once again to violate the law by failing to set funding for the following budget year. SSA for Fiscal Year 2018 was to have been set by mid-February.More: “Sensible context on school aid growth” blog post, March 29, 2016https://iowapolicypoints.org/2016/03/29/sensible-context-on-school-aid-growth/

Water quality and school infrastructure Another legislative session has come and gone without agreement on a sustainable strategy to improve Iowa’s water quality, which is threatened by agricultural pollution — either with regulation, funding or a combination of both. Iowa voters gave lawmakers a roadmap to a funding solution in 2010 with a constitutional amendment designating the next 3/8-cent sales tax increase to go toward land and water protection and enhancement. Neither the Governor nor a majority of legislators has taken that step, nor have they taken it to a vote even though the amendment passed the Legislature in two consecutive general assemblies before it went to the voters. Other proposals offered during the session would have diverted funds from existing and designated uses toward water quality, but not in sufficient amounts or without damaging other services. More: “To fund water solutions, why not the obvious? Tax pollutants,” blog post, March 7, 2016https://iowapolicypoints.org/2016/03/07/to-fund-water-solutions-why-not-the-obvious-tax-pollutants/

Continued state spending for business The Governor’s unilateral action to expand a sales tax exemption for manufacturers was left in place; though scaled back, it will still take $21 million from next year’s budget at a time when schools and universities are scrapping for every dollar. Moreover, the exemption was combined with a more costly decision to “couple” with federal tax code changes for the current budget year. The coupling cost in the current year, $98 million, was not budgeted by the Governor and Legislature, has no value to incentivize investment, and comes at a time other identified state priorities have seen funding held down or reduced on grounds that revenue is not available. The Legislature left open the question of whether coupling will continue next year, and thus uncertainties on new unbudgeted costs. Iowa policy makers are too quick to provide tax breaks without finding ways to fund our traditional priorities.More: “High Cost of Conformity,” IFP Policy Brief, March 2, 2016http://www.iowafiscal.org/high-cost-of-conformity/

Business tax credits have become an increasing share of state spending and are rising in cost at a faster pace than priorities in education and human services. Iowa taxpayers will see more of their dollars going to business subsidies next year, with little or no accountability for the public return on investment.

The Iowa Fiscal Partnership is a joint public policy analysis initiative of two nonpartisan, nonprofit Iowa-based organizations, the Iowa Policy Project in Iowa City and the Child & Family Policy Center in Des Moines. Reports are at www.iowafiscal.org.

The Governor’s office today asserted that his proposal to divert revenue from the school infrastructure sales tax to clean water initiatives “would mean more jobs for Iowa families.” This assertion is quite misleading, because the Governor puts his plan in a vacuum.

In fact, there are alternatives to the Governor’s plan, both in funding of water strategies and in the use of an already established statewide penny sales tax that he would divert from its intended purpose: school infrastructure. The study the Governor relied on makes it clear that researchers could not say whether the Governor’s diversion would create more jobs or fewer jobs than alternative uses of the funds.

The Governor’s news release cherry-picks the study’s findings, quoting a line from its executive summary, that on an annualized basis, “projected spending under this proposal would generate approximately $690 million in economic activity, 1,150 full-time direct employment positions and 2,800 total full-time positions.”

The statement conveniently ignores the next, and concluding, line of the researchers’ own summary of their findings: “However, it should be understood that alternative projects and proposals are likely to result in similar economic activity and employment.”

We make no conclusion about the researchers’ findings. That there are economic benefits in addressing Iowa’s significant problem with agriculture-induced water pollution will surprise no one.

What also would be no surprise is that economic benefits would result — perhaps more — from increased school infrastructure spending. The Governor’s plan diverts funds from that already designated purpose between 2017 and 2029, and would direct the lion’s share of growth in that revenue source to his preferences for the 20 years following.

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Iowa gave away over $53 million in tax year 2019 to businesses that paid no state income tax. The same amount would have provided about a 1 percent increase in state school aid, with millions to spare for other critical services.
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